The First Every Cryptocurrency Back By Real Estate, REcoin, is a big scam. At least according to the Securities and Exchange Commission.
Several weeks ago the SEC posted an Investor Bulletin in Initial Coin Offerings. In the bulletin, the SEC raised the issue that an initial coin offering could easily be considered an offering of securities, which would require compliance with the securities laws. The SEC warned that fraudsters had begun using ICOs as fraudulent investment schemes.
It seems easy to paste together some mumbo-jumbo to make it sound like the blockchain could be something useful and disrupt an industry. You can add dash of hope for the conspiracy freaks by noting the ICO is free from government fiat and the Federal Reserve. Add in the lure of big profit. Then rope in the suckers.
You can see all of that in the white paper for REcoin.
- 100% (less the cost of maintenance) of proceeds from the sale of REcoin are invested in real estate
- REcoin Trust guarantees 70% of the investors’ market value, against the US Federal Reserve’s 10%
The SEC alleges that REcoin misstated to investors that it had a “team of lawyers, professionals, brokers, and accountants” that would invest REcoin’s ICO proceeds into real estate. In fact none had been hired or even consulted.
REcoin was “backed by secure real estate investments in the world’s most advanced economies” and touted that the asset’s “security is ensured through the use of one of the soundest and most reliable currency backings there is: real estate.” REcoin never purchased any real estate, either before, during, or after the REcoin ICO, with the proceeds of the REcoin ICO or otherwise
REcoin misrepresented that it had raised between $2 million and $4 million from investors when the actual amount is approximately $300,000. Sadly, I suspect it has all been pilfered or misused. Investors who transferred funds to REcoin never received any form of digital asset, token, or coin, and no token or coin for REcoin has ever been developed.
I think there will be some interesting uses for the blockchain technology. None of them involve coins.
Sources:
- SEC Exposes Two Initial Coin Offerings Purportedly Backed by Real Estate and Diamonds
- SEC complaint
- REcoin “Technical” white paper
- Initial Coin Offerings and the Securities Laws
- Investor Bulletin: Initial Coin Offerings
